Programs Supporting Cleantech and Clean Energy Development in Canada, San Francisco Cleantech Forum. Includes: Status of Climate Change Developments, Local/Regional Emission Reduction Programs, Financing CleanTech in Canada, etc.

1. Programs Supporting Cleantech and Clean
Energy Development in Canada
Cleantech Forum ‐ San Francisco
Presented by: John Goetz, Partner
Guy Paul Allard, Partner
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2. Introduction
• Climate Change agenda and legislation seem to be
losing momentum
• Cleantech sector is still growing and has benefited
from government stimulus programs
• Cleantech development may no longer be dependent
on the success of cap and trade and GHG emission
reduction programs, although they would still help
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3. Outline
• Stimulating Cleantech in Canada
• Opportunities for Cleantech Development in Canada
• Financing Cleantech in Canada
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4. Stimulating Cleantech in Canada
• Status of Climate Change initiatives and what they
could still mean
• Special Programs and Funds
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5. Status of Climate Change Developments
• Past 18 months has seen a dramatic shift away from
comprehensive federal climate change programs in
the U.S. and Canada
• Canada abandoned its initial plan in favour of
following U.S. Cap‐and‐Trade Plan
• U.S. and Canada committed to Copenhagen Accord
targeting 17% reductions by 2020
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6. Status of Climate Change Developments
• American Power Act Bill, unable to pass in the Senate
• Obama announced he would be “looking for solutions
other than Cap‐and‐Trade” to address U.S. emissions
• Now that the U.S. is not proceeding federally, what is
Canada doing?
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7. Addressing Climate Change
• EPA now regulating emission reductions
• EPA has not ruled out introducing its own cap and
trade scheme
• Harsh EPA measures could force Congress to step back
in to replace EPA regulation
• Canadian Government not likely to act federally until
there is a clear signal from the U.S.
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8. What is left for Cap and Trade?
Local and Regional Emission Reduction Programs
• Western Climate Initiative (WCI) on track to start in 2012
• Initial target is to cut emissions to 15% below 2005 levels by
2020
• WCI includes a cap‐and‐trade program to facilitate emission
reductions and trade the reductions for cash
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9. What is left for Cap and Trade?
Local and Regional Emission Reduction Programs
• Of 11 WCI Partner jurisdictions, a number of large
jurisdictions such as California, B.C., Ontario and
Quebec are on course to start cap‐and‐trade program
in 2012 ‐ Manitoba intends to follow
• The Canadian partner provinces represent about 46%
of Canadian GHG emissions
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10. Local/Regional Emission Reduction Programs
• California recently unveiled new draft regulations for a GHG
Cap‐and‐Trade Program pursuant to AB ‐32 Global Warming
Solutions Act of 2006
• California voted down Proposition 23 which would have
suspended AB 32 ‐ until unemployment levels reached almost
unachievable levels (< 5.5% for 4 consecutive quarters)
• Recent court ruling against CARB not expected to survive
appeal
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11. Local/Regional Emission Reduction Programs
• There are several other states, territories and provinces that
are Observers to the WCI, including Nova Scotia, Saskatchewan
and the Yukon
• Canadian Partner jurisdictions comprise 79% of Canada’s
Population and 76% of Canadian GDP*
*WCI Design Summary
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12. Local/Regional Emission Reduction Programs
• British Columbia has enacted several pieces of climate change
legislation including:
– GHG Reduction (Cap‐and‐Trade) Act and have released draft regulations
for offsets and emission trading
– Renewable and Low Carbon Fuel Requirement Act
– Vehicle Emissions Standards Act
• Ontario has enacted:
– Green Energy Act which includes sweeping provisions for accelerating
the development of renewable energy projects
– Feed‐in‐Tariff (FIT) program has stimulated massive renewable project
investment (See Government of Ontario figures)
– Environmental Protection Amendment Act with emission reduction
provisions and Greenhouse Gas Reporting Regulation
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13. Local/Regional Emission Reduction Programs
• Quebec has:
– Environment Quality Act, R.S.Q. c.Q‐2
– Bill 42 ‐ An Act to amend the Environment Quality Act and other
legislative provisions in relation to climate change
– Regulations expected to come Spring, 2011 to implement WCI in 2012
– Renewable Energy RFP Program
• Has stimulated massive investment in wind energy projects
• Further RFP’s are expected once government determines actual amount of
expected construction under most recent RFP
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14. Local/Regional Emission Reduction Programs
Non‐WCI Jurisdictions
Alberta
• Requires 12% reduction in emissions intensity by large emitters
from 2003 baseline
• Large final emitters (LFE’s) have spent approx. $350 million on
emission compliance instruments since 2007
• Expected to rise by another $100 million this year to $450
million
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15. Local/Regional Emission Reduction Programs
Non‐WCI Jurisdictions
Alberta
• Program has accumulated almost $200 million in the Climate
Change and Emissions Management Fund
• Approx $88 M spent on offsets by LFE’s to end of 2010
• Expected to increase to $140 M in 2011
• $2 Billion to Carbon Capture and Sequestration (CCS)
• 5 million tonnes/yr by 2015
•170 million tonnes/yr. by 2050
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16. Local/Regional Emission Reduction Programs
Non‐WCI Jurisdictions
Saskatchewan
• Management and Reduction of Greenhouse Gases Act ‐ draft regulations
expected in early 2011
• Similar to Alberta’s program, with lower initial reduction targets
• Green Options Partners Program (100 kW – 10 MW)
• Power Call for up to 50 MW of Wind, solar, flair gas, low impact
hydro, biomass
• 20 year standard offer purchase agreements – up to 30 – 40 year
contracts for low impact hydro
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17. Local/Regional Emission Reduction Programs
Renewable Fuels Regulations
• Provides for the cooperation of the renewable and
non‐renewable fuel sectors in Canada
• The Regulations introduce a five percent renewable fuel
content requirement for gasoline produced or imported in
Canada
• Market mechanism allows renewable fuel producers to sell
compliance units to non‐renewable fuel producers/importers
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18. Opportunities in Canadian Cleantech
Significant Enabling Factors
• Oil Sands and Resource Development demands clean
technologies
• Canada’s Economy is strong and growing
• Transmission to U.S. improving over next 5 years
• Good solar, wind and hydro resources
• Corporate partnering/investment is growing
• Coal plants being phased out in Ontario and other provinces
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19. Hotspots for Canadian Cleantech
Renewable Energy Development
• Quebec – RFP Program, if continued
• Ontario – FIT and Microfit Program
• Saskatchewant – Green Options Partner Program
• Alberta – CCEM Fund – Offsets – Need for Cleantech
• British Columbia – Pacific Carbon Trust – WCI Leadership
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20. Financing CleanTech in Canada
• Overview of Canadian Landscape
• Special Programs/Funds
• Venture Capital/Private Equity
• Project Financing
• Capital Markets
– TSX
– TSX‐V
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21. Overview of Canadian Landscape
• Strong Federal and Provincial Support for CleanTech
– Regulatory initiatives, investments and financial incentives
– Concurrent jurisdiction
• Provincial Diversity
– Feed‐in‐tariffs
– RFPs
– Legal/Cultural
• Foreign Investment in Canada
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22. Special Programs/Funds
• Programs and Incentives
– Scientific Research & Experimental Development (SR&ED) program
– Provincial investment tax credits for R&D expenses
• Examples of Specialized Funds
– SDTC
• Bridges the funding gap in innovation chain
– Investment Accelerator Fund (IAF)
• MaRS
– Clean Energy Fund
– Green Infrastructure Fund
– Emerging Technologies Fund (Ontario)
– Bringing Technology to Market Program (Alberta)
– Innovative Clean Energy Fund (British Columbia)
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23. Venture Capital
• Limited “angel” resources
• Continuing limited capacity of Canadian VC’s to fund new
rounds
• Many U.S. VC’s have invested in and continue to invest in
Canadian companies
• 2010 tax changes (changes to S. 116) removed many
impediments to U.S. VC’s investing in Canadian companies
• Cross‐border deals can be done using “U.S. paper” with limited
modifications
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24. Venture Capital (cont’d)
Issues Related to U.S. VC’s Investing in Canadian Companies
– Canadian company owning real estate
– Employment laws
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25. Project Financing
• Canadian Banks
• Life Insurance Companies/Pension Funds
• Foreign Banks
• Debt financing
– Terms
– Leverage and Security
– Asset‐Based Lending
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26. Capital Markets
• TSX is 1st in the world by number of listed CleanTech
companies (131)
• Many non‐Canadian companies list on TSX also (8% of 2010
new International Listings were in the CleanTech sector)
• IPO costs and ongoing compliance costs tend to be less than in
U.S.
• Various methods for going public on the TSX available –
attractive for both large and small cap issuers
• TSX Venture Exchange
– Capital Pools Companies/Special Purpose Acquisition Companies
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27. Contact Us
John Goetz
403 268 7167
John.goetz@fmc‐law.com
Guy Paul Allard
514 878 8876
guypaul.allard@fmc‐law.com
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28. The preceding presentation contains examples of the kinds of
issues companies looking at cleantech programs in Canada
could face. If you are faced with one of these issues, please
retain professional assistance as each situation is unique.